Why Alder Biopharma Is Winning Big on Monday

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Alder Biopharmaceuticals Inc. (NASDAQ: ALDR) saw its shares make a solid gain on Monday amid a blizzard of updates from the company. Overall, the firm met its primary endpoint in a late-stage trial, entered into a global license agreement with another firm and received a sizable equity investment. Although this seems complicated, it all ties together quite nicely.

First, the firm announced that eptinezumab, its lead investigational product candidate for migraine prevention targeting calcitonin gene-related peptide (CGRP), met the primary endpoint in its pivotal Phase 3 Promise 2 clinical trial with very high statistical significance compared with the placebo for both dose levels tested in the trial following a single quarterly infusion.

Additionally, eptinezumab met all key secondary endpoints with very high statistical significance compared with the placebo including prevention beginning Day One and 50% and 75% responder rates month one through month three. Furthermore, 15% of eptinezumab patients had no migraines for a full three months.

Alder also mentioned that it entered into a European patent settlement and global license agreement with Teva Pharmaceuticals International. Under the terms of the agreement, Alder has received a nonexclusive license to Teva’s CGRP patent portfolio to develop, manufacture and commercialize eptinezumab in the United States and worldwide, excluding Japan and Korea. According to the agreement, Alder will:

  • Withdraw its appeal before the European Patent Office;
  • Make an immediate one-time payment of $25 million to Teva;
  • Make a second one-time payment of $25 million upon the approval of a biologics license application (BLA) for eptinezumab with the U.S. Food and Drug Administration or of an earlier equivalent filing with a regulatory authority elsewhere in the license territory in which any Teva licensed patents exist; and
  • Following commercial launch of eptinezumab, pay $75 million at each of two sales-related milestones (at $1 billion and $2 billion in annual sales) and provide certain royalty payments on net sales at rates from 5% to 7%.

Finally, Alder announced that investors affiliated with Redmile Group have committed to purchase up to $250 million of non-voting class A preferred stock during the three-year term of the agreement with an initial purchase of $100 million. Keep in mind that Alder has a total market cap of $988 million.

Alder intends to use the net proceeds from this to fund payments under Alder’s European patent settlement and global license agreement with Teva.

Shares of Alder were last seen up about 12% at $14.57, with a consensus analyst price target of $24.00 and a 52-week trading range of $8.60 to $25.45.

Teva shares traded at $19.22. The stock has a 52-week range of $10.85 to $37.94 and a consensus price target of $18.72.

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